Difference Between Accidental Death and Life Insurance (With Table)

A business may provide coverage for accidental death as well as life insurance. Accidental death coverage will payout if you die due to an unintentional injury or sickness, such as a heart attack, stroke, or cancer. If you die due to old age or a disease unconnected to an accident, your life insurance will pay out after a predetermined length of time.

Accidental Death vs Life Insurance

The main difference between accidental death and life insurance is that the latter pays out if you die due to an injury or sickness that was not your fault (including heart attack, stroke, and cancer). On the other hand, if you die of natural causes, your life insurance policy will payout.

If an accident results in injury or illness, the accidental death coverage will kick in and compensate the family. For example, if you are killed during a robbery, your family will receive your life insurance policy proceeds. Your family’s financial well-being is protected in the case of an accident, thanks to accidental death coverage.

If you die due to natural causes, your life insurance policy will pay out after a predetermined length of time. If the loss is the consequence of an accident or injury, the coverage does not pay out (including heart attack, stroke, cancer). It’s possible that your family won’t have enough money if you pass away before you’ve reached retirement age. Getting life insurance may be difficult or impossible if you have a pre-existing medical condition.

Comparison Table Between Accidental Death and Life Insurance

Parameters of ComparisonAccidental DeathLife Insurance
DefinitionTo be considered an accidental death, one must have died due to an injury sustained in an unintentional event, such as being struck by another vehicle or object or drowning.It is a contract in which the policyholder’s life is guaranteed in exchange for recurrent premium payments over a defined length of time. Unpaid debts and funeral and burial expenditures are among the most common uses of the death benefit.
TypesAccidental deaths can be divided into two categories: those that occur during work hours but are off-duty, and those that occur during work hours but are not related to the workplace.Various life insurance products are available, including term, universal, whole, accident-only, health-only, and income replacement due to illness or disability. In addition, death benefits may be paid out in one sum or periodic payments.
AdvantagesAccidental death insurance is much less expensive than life insurance. As a result of the accident, it covers any death or injury that may ensue.Loans, mortgage protection, and tax-deferred savings are just a few of the many advantages of having life insurance.
DisadvantagesThis policy does not cover Accident-related deaths and injuries.The additional advantages it provides to the insured are more expensive than standard accidental death insurance.
ExampleUnintentional death is referred to as an accidental death.Having dependents and wanting to ensure their well-being in the event of one’s untimely death are both excellent reasons for purchasing life insurance.

What is Accidental Death?

When a person dies in an accident, it is known as accidental death, and car accidents account for the bulk of unintentional deaths. Then there are circumstances generated by events where no human fault is involved. Accidental death insurance is available in two forms: life insurance & accidental death coverage (ADC).

The government may cover funeral and medical expenditures for the deceased’s relatives if specific criteria exist. Claims on life insurance policies and accidental death coverage are the primary sources of this money.

To ensure that their loved ones would be financially secure in the event of their death, many people obtain accident-related life insurance policies. If you have dependents who might need financial assistance in the case of your death, it seems sensible to make provisions for accidental death.

The benefit of accidental death is that the individual who died can choose who will get the inheritance money on their behalf. They can also specify how much money would be distributed to their recipients in the event of a tragedy. In contrast, if someone is hurt or killed at work, they will very certainly not be eligible for accident-related coverage because they would not be in their house.

What is Life Insurance?

Your loved ones will be compensated for your death due to a contract you have with a life insurance company under which you agree to pay premiums. Accident-only, health-and-disability-income-protection coverage, and term, universal, or whole life insurance are all types of life insurance policies.

In the case of your death, life insurance, also known as a life assurance policy or “term” insurance, provides your family with a source of income. From last expenses like a burial to college tuition, the money provided can be used for many different uses.

Employees’ benefits packages often include life insurance as a means of protecting themselves against the possibility of losing their source of income.

The benefits of having life insurance include paying off debts or covering burial costs. Having a life insurance policy in place, even if someone dies from something other than an accident, can provide financial security for their loved ones in the event of their death.

Main Differences Between Accidental Death and Life Insurance

  1. The difference between accidental death insurance and life insurance is that unintentional death insurance gives a lump sum payout in the case of an accident. Cancer and heart illness are examples of conditions for which life insurance does not payout, such as when you die from a car accident.
  2. It is less expensive and does not require physical examinations to apply for accident death insurance. However, life insurance may need a physical exam and more thorough medical information.
  3. It is more critical to have accidental death coverage than
  4. Accident death insurance typically pays out the policy’s face value if a person dies in an accident to aid with funeral fees and other expenditures associated with death. At the end of a named insured under a life insurance policy, the policy’s face value is paid out.
  5. Your loved ones will not have to worry about unforeseen bills when you die because of accidental death coverage. People with poor health can also buy life insurance to ensure that they will be taken care of in an illness like cancer or Alzheimer’s.

Conclusion

Many people already have life insurance covering accidental deaths, so it’s vital to examine your policy’s coverage before purchasing unintentional death protection. If your life insurance policy does not cover accidental fatalities, you may need to purchase supplementary coverage. Some of the benefits include no waiting time before payout, age, or health restrictions.

Insurance companies handle accidental death plans, paid for annually by policyholders. In case of accident or death, this policy also isn’t required.

References

  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/umem27&section=29
  2. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/molr69&section=12